Methods of Sale

Should I sell by Auction or Private Treaty?

This can be a dilemma for some Sellers knowing which method to use to achieve the best possible price for their property. You should discuss this with your real estate agent and be guided by his/her advice as to the method of sale that he/she thinks will best achieve your aims.

What ever method is used the selling agent and the seller must sign a PAMD Form 22a Appointment of Real Estate Agent (Sales & Purchase) in order to legally set the terms of the selling agreement.

AUCTION
If you submit your property to auction this means that the prospective purchasers will bid against one another at the day of the auction. The auction day should be at a date and time suitable to you. The location can be at an independent venue or on site. Some auctioneers prefer on site as you get a true indication of the interested parties by the number of people at attendance on the auction day.

However you should do some research as to the auctions that have been conducted over recent months and the results achieved. In a competitive atmosphere and market auctions can often achieve a better price.

When you sell at auction the property stays “SOLD” as the auction is usually unconditional for the Buyer, and the successful bidder is obliged to sign the contract and pay a deposit, (generally 10%) on the fall of the hammer.

Auction gives you three opportunities to sell:-

1.     Sale before auction,
2.     On the auction day,
3.     After the auction.

PRIVATE TREATY
There are four methods of sale which are private treaty.
1 Exclusive Agency or Sole Agency
2. Multilist
3. Open List
4. Do-It-yourself (DIY)

Exclusive Agency or Sole Agency
By appointing a real estate agent on the basis of Exclusive Agency or Sole Agency Agreement, the seller should limit themselves to a one agent selling their property to potential buyers.

This can be advantageous as the one agent will be more focused on selling your property for the best price. The agent has made a commitment to you and you to them. Therefore both of you will be working as a team to achieve the best result.  This can also be less confusing for the seller as they only have to liaise with one agent.

Under the Property Agents and Motor Dealers Act (PAMD) 2000, a seller can only appoint an agent under this agreement for a period of 60 days. During this time the seller can decide weather to renew the agreement or not after this period has expired.

On a Exclusive Agency the seller pays the agent‘s commission regardless of whether the seller sells the property themselves during the 60 day period.

On a Sole agency you are not required to pay the agents commission should you sell the property yourself.  Having said this, remember an agent may be reluctant to advertise and promote your property if they are unable to recover these costs by way of commission from the sale.

Multilist
A multilist agreement is also an exclusive agency agreement where the seller appoints one agent and that agent agrees to work in conjunction with other multilist agents in order to sell the property.

When the property is sold, the agent’s commission is divided between the original listing agent and the agent that actually introduced the successful buyer to the property.

Open List
An open listing is where the seller lists their property for sale with a number of real estate agents in the local area.

Under an open listing agreement, each agent can sell the property individually or work with another agent to sell the property.

Only the agent that introduces the buyer to the property will receive the commission from the seller.

Do-it-Yourself (DIY)                                                                   This method requires a seller doing the job of the real estate agent, who takes on the task of marking and advertising a property as well as introducing and arranging for prospective buyers to inspect a home, DIY also requires the private seller to negotiate a price tag on their home with prospective buyers and then finally arranging the Contract of Sale with the buyer and organising legal and financial arrangements for the transfer of the property.  Your home is a very personal and private area of your life and it is often very difficult for the seller to separate personal and business interest.

Market analysis, valuation, marketing, advertising and negotiation are all skills in which experienced and licensed real estate agents are professionally trained.

If a private seller conducts the transaction and it results in difficulties or financial loss, the seller (and the buyer) will not be able to claim compensation from the State Government Claim Fund.